simple fade

I moved to Premiere Pro CC from FCP just a couple of months ago. The transition has been smooth but there is one thing that is driving me crazy. I'm sure there is something very easy that i'm missing or it my be a glitch, here is the problem: when I add a fade to black to my video track 1, it fades to a grey and white squares screen (see picture attached) is like when you work on photoshop and deselect the background. is it something to do with alpha channels??
It doesn't matter if I do the fade using keyframes or right clicking and applying default transition or using dip to black... the squared screen is there.
At the moment in order to short that out I create a black video track and put it in video track 1 and always edit from the tracks above, so when i fade to black it fades to the black on track 1. I'm sure there is a better solution or a setting that I got wrong.